Target Painters & Decorators Ltd v Omid Construction Management Group Ltd - [2019] NZHC 2544

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-001607

[2019] NZHC 2544

UNDER the Companies Act 1993

IN THE MATTER OF

an application under s 290 of the Companies Act 1993 for an order setting aside a statutory demand

BETWEEN

TARGET PAINTERS & DECORATORS LIMITED

Applicant

AND

OMID CONSTRUCTION MANAGEMENT GROUP LIMITED

Respondent

Hearing: 23 September 2019

Appearances:

M R T Colthart and C Smith for Applicant

A J B Holmes and E R Mulvey for Respondent

Judgment:

7 October 2019

Reissued:

11 October 2019

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

TARGET PAINTERS & DECORATORS LIMITED v OMID CONSTRUCTION MANAGEMENT GROUP LIMITED [2019] NZHC 2544 [7 October 2019]

Introduction

[1] This is an application pursuant to s 290 of the Companies Act 1993 by the applicant, Target Painters & Decorators Ltd (Target), to set aside a statutory demand. The sum at issue is $78,687.23. It arises from an adjudication determination (determination) under the Construction Contracts Act 2002 (CCA) in favour of the respondent, Omid Construction Management Group Ltd (Omid), dated 25 July 2019.

[2] Target has filed judicial review proceedings against the determination, contending that the adjudicator had no jurisdiction to determine the dispute between the parties. Target pleads that the Notice of Acceptance was not validly served, was not served on the Arbitrators and Mediators Institute of New Zealand (AMINZ) and was not in the form prescribed by the regulations as required under the CCA.

[3] The critical issue I must determine is whether the applicant, Target, has demonstrated that, in the context of the CCA, there is a genuine and substantial dispute as to the existence of the debt or whether, as Omid contends, the matters complained of by Target are meritless, technical matters, contrary to the philosophy of the CCA of regular and timely payments and the speedy resolution of disputes.

Relevant legal principles

[4] The Court’s jurisdiction to set aside a statutory demand is contained in s 290(4) of the Companies Act 1993. That section reads:

290 Court may set aside statutory demand

…

(4)The court may grant an application to set aside a statutory demand if it is satisfied that –

(a)there is a substantial dispute whether or not the debt is owing or is due; or

(b)the company appears to have a counterclaim, set-off, or cross- demand and the amount specified in the demand less the amount of the counterclaim, set-off, or cross-demand is less than the prescribed amount; or

(c)the demand ought to be set aside on other grounds.

[5] The Court of Appeal has recently confirmed the principles the Court should apply in exercising this jurisdiction.1 The principles are:

(a)The applicant must show that there is arguably a genuine and substantial dispute as to the existence of the debt.

(b)The mere assertion the dispute exists is not sufficient. Material short of proof is required to support the claim that the debt is disputed.

(c)If such material is available, the dispute should…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] NZHC 2544
Decision Date: 7 October 2019

CaseChat Overview and Summary

Target Painters & Decorators Ltd (Target) filed an application to set aside a statutory demand issued by Omid Construction Management Group Ltd (Omid) under s 290 of the Companies Act 1993. The statutory demand was based on a statutory determination issued by an adjudicator under the Construction Contracts Act 2002. Target argued that the adjudicator lacked jurisdiction to determine the dispute due to several alleged errors, including the form of the Notice of Acceptance. The court considered whether Target had demonstrated a genuine and substantial dispute about the existence of the debt, or whether the statutory demand should be set aside on other grounds. The court found that while there were arguable errors in the adjudicator's process, Target had not shown any real prejudice resulting from these errors. The court concluded that the statutory demand should not be set aside, and ordered Target to pay the debt claimed in the statutory demand within a specified period, failing which Omid could apply to put Target into liquidation. The court also ordered Target to pay Omid's costs on a 2B basis with a 25 per cent uplift.

Orders